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Background: People with severe depressive illness have raised levels of cortisol and reduced glucocorticoid receptor function., Aims: To obtain a physiological assessment of hypothalamic-pituitary-adrenal (HPA) axis feedback status in an in-patient sample with depression and to relate this to prospectively determined severe treatment resistance., Method: The prednisolone suppression test was administered to 45 in-patients with depression assessed as resistant to two or more antidepressants and to 46 controls, prior to intensive multimodal in-patient treatment., Results: The patient group had higher cortisol levels than controls, although the percentage suppression of cortisol output after prednisolone in comparison with placebo did not differ. Non-response to in-patient treatment was predicted by a more dysfunctional HPA axis (higher cortisol levels post-prednisolone and lower percentage suppression)., Conclusions: In patients with severe depression, HPA axis activity is reset at a higher level, although feedback remains intact. However, prospectively determined severe treatment resistance is associated with an impaired feedback response to combined glucocorticoid and mineralocorticoid receptor activation by prednisolone.